Storms, no cover, no comeback: Why SA agriculture is sitting on a ticking time bomb

South Africa's farmers are on the frontline of a worsening climate crisis — and most are dangerously exposed. A string of devastating storms has exposed a gaping hole in agricultural risk coverage, with many farmers, particularly smaller and emerging ones, carrying little or no insurance. The losses are mounting, the recovery times lengthening, and food security is quietly at risk. Now, industry voices and insurers are pushing for a state-backed private insurance scheme to close the gap before the next disaster strikes. It's a conversation South Africa can no longer afford to put off - as Business Day articulates this morning..By Stella Mapenzauswa.The inclement weather that has devastated the Western Cape and Eastern Cape has shown that most South African farmers are not adequately insured against extreme weather events, which are likely to become more frequent as a result of climate change.Farmers in both provinces are still reeling from the heavy loss of crops and livestock and damage to infrastructure from flooding in May, which left 11 people dead in the Western Cape.At the end of May, premier Alan Winde said the Western Cape government had concluded an assessment of areas hardest hit by the severe weather and found that “the scale of the devastation is immense”.It did not give any preliminary monetary estimates of the damage, but various industry associations have estimated it to be in the billions of rand.As farmers confront the harsh reality of a changing climate, insurance has become “not optional, but rather essential to protecting livelihoods, sustaining production and enabling faster recovery after climate disasters”, the state-owned Land Bank said.And yet, just one third of the close to 35,000 commercial farmers in South Africa generally buy insurance, the bank — whose mandate is to serve the commercial and emerging farming sectors — said in a written response to questions from Business Day.“The balance does not insure largely due to affordability challenges. The storms in the Western Cape happened towards the end of the summer production season. It is difficult to determine if take-up will pop up as a result of the recent storms,” it added.Take-up of insurance by small-scale farmers is even lower, and estimated at less than 1% of the agricultural insurance market, the bank said. This is despite these producers being the most vulnerable in the sector to extreme weather events.“The low adoption rate is largely attributable to product knowledge limitations, product suitability and costs. To address this, we must develop insurance products that are fit for purpose and bespoke for this market segment,” it said.The fallout from the recent weather damage to farms has exposed the critical flaw in the traditional approach to agri-reliant insurance — that it is “a grudge purchase to be bargained down during annual renewals”, said Wehann Smith, CEO of Kuda Holdings, which offers specialised bloodstock, agricultural and other commercial insurance..“The economy is navigating tough headwinds, and so it is understandable if it is tempting to try to shave down insurance premiums by trimming coverage,” Smith wrote in a note.“Yet, the stark reality is that when standing on an utterly devastated farm, surrounded by infrastructural ruin, the exercise is not just about replacing physical bricks and mortar, rather it is fundamentally about business continuity.”South Africa’s agriculture sector needs a blended state-private insurance scheme to help farmers hit by disasters, agriculture minister John Steenhuisen told the media in May in the aftermath of the torrential rains, intense cold and gale-force winds that devastated farms.He said discussions had already been held with private insurance companies to assess the appetite for such a scheme, which would be similar to the state-owned South African Special Risk Insurance Association, which provides insurance for damage caused by riots, terrorism and civil unrest.The financial assistance provided by the declaration of a national disaster often came months after the devastation, too late for some farmers, the agriculture minister added.After a 2025/26 season generally characterised by the La Niña climate pattern, with above-average rainfall in most parts of the country, the switch to a drier El Niño 2026/27 summer could trigger higher demand for agricultural insurance, the Land Bank said.But even though farmers are aware of the immense climate-related risks in their businesses, the premiums are often too high for many of them, said Wandile Sihlobo, chief economist at the Agricultural Business Chamber of South Africa (Agbiz).“There is great room for insurance in our agricultural sector. The challenge is typically affordability and this cuts across all agricultural commodities or production systems,” he told Business Day.“The challenge about today’s environment is that we also see broad pressure on input costs, fertiliser, seeds and agrochemicals.”In addition to the impact of severe weather, farmers are reckoning with higher fertiliser costs and, like the rest of South African consumers and businesses, a spike in the price of petrol and diesel as a result of the Middle East war, which has disrupted the flow of cargo through the Strait of Hormuz..This article was originally published by Business Day and is republished with permission..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. 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Storms, no cover, no comeback: Why SA agriculture is sitting on a ticking time bomb

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